AT&T: Cloud deal with Microsoft validates virtualization

A lot of people did a double take when hearing for the first time last week that AT&T is shifting its mobile network traffic over to be managed by Microsoft Azure. It will start with AT&T’s 5G core.

In turn, Microsoft is getting access to AT&T’s intellectual property. Microsoft is actually acquiring AT&T’s carrier-grade network cloud platform technology, which is what AT&T’s 5G core network runs on. Some AT&T employees presumably will be moving to Microsoft, which is making job offers to some. Read more on Microsoft’s perspective here.

For AT&T’s outlook, Fierce Wireless talked with SVP of Engineering and Operations Igal Elbaz, who took time out during a warm (holiday, for some) week to answer a few burning questions about AT&T’s relationship with Microsoft.

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AT&T will continue to operate its network. The thing that’s different is rather than continuing to develop the software that runs on the cloud network, AT&T will hand that over to Microsoft for operations and development. Anything on top of it, like network functions and service creation, stays with AT&T, and nothing changes there, Elbaz said.

AT&T started its virtualization journey about seven years ago. That path included moving to a virtualized system where the software and hardware are separated, and “that’s been a journey in our industry that we spearheaded,” he said. Now, it’s a pretty common part of the industry.  

But back then, it wasn’t clear the right capabilities were available at an affordable cost structure for AT&T to rely on other parties. “When we started that journey, out of necessity, we had to build our own telco-grade underlying cloud platform to be able to support our virtualization journey,” he said. “So we did it ourselves,” building a telco-grade cloud platform, which its 5G mobility core is running on top of today.

“We are at a point where we feel confident that we can take the telco-grade cloud platform that we’ve engineered for years and allow Microsoft to continue” and scale that while building an ecosystem that serves AT&T and other operators with that, he said.

The transition to containerization will continue for AT&T – that’s not going away. “We as an operator … we still need that expertise to design, build, engineer and operate that network,” he said. The only thing that has changed is “we take advantage of an underlying cloud platform that used to be developed by us, and now it will be continued to be developed by Microsoft.”  

Why Microsoft? Elbaz said they’ve been working together and built a strong alliance. When discussing the future, there was a good level of partnership and alignment about what it was going to look like and how they could structure a deal to benefit both sides.

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One of the advantages is from Day One, it can continue operating the network the same way it’s been doing, and that’s “really important to us. We can continue to engineer and operate our network on the same cloud platform because we built it,” he said. Over time, Microsoft will continue to build additional capabilities on top of it.  

“They also saw the value of the assets of our telco grade network cloud,” he said, adding that it was then just an extension of a strong relationship that was honed over the last couple of years.

Seemingly in a similar way where AT&T is distancing itself from non-core businesses, it appears to be focusing on its legacy expertise: running a telecom network. “We can focus on continuing to build a 5G network and operate it like we should,” he said.

Editor's note: Article updated July 7 with Igal Elbaz's new title.